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The Salt Lake Tribune published this op-ed championing local investment in Internet infrastructure on December 11, 2015.

Op-ed: Spanish Fork’s success shows municipal Internet networks work

By Christopher Mitchell

For nearly 10 years, large telephone and cable companies have claimed municipal Internet networks are so risky that local government authority should be restricted. But after 15 years of experience, we can only conclude that the cure is worse than the disease.

Utah has three municipal networks, where local governments invested in Internet infrastructure to provide choices in a monopolistic environment. But only two of those networks are regularly discussed and used as examples of why local governments shouldn't be in this business: iProvo and UTOPIA, which were not able to meet their financial targets.

The network missing from the conversation is Spanish Fork Community Network, which has just finished paying off its debt and has generated millions of dollars in surplus revenue for the community. The network is now upgrading from community cable to community gigabit fiber optics.

Of the over 450 municipal networks tracked by the Institute for Local Self-Reliance, Spanish Fork's experience is above average. The vast majority of municipal networks deliver benefits well in excess of costs and do not require subsidies to operate.

It may come as a surprise, but iProvo and Spanish Fork are nearly twins, separated at birth and raised in dramatically different environments. Both were conceived at the same time — the same consultant did the feasibility study for each. But Spanish Fork, being smaller and more nimble, was able to move forward before Utah's Legislature weighed in to restrict local decision-making.

Comcast and the predecessor to CenturyLink crafted the legislation, which was revealed in a brilliant 2011 BusinessWeek article aptly entitled "Pssst … Wanna Buy a Law?" by Brendan Greeley and Alison Fitzgerald.

Since then, any new Utah municipal network has been subject to numerous requirements unlike anything private providers face, including a de facto requirement to use a wholesale-only arrangement.

Provo wanted to use the same business model as Spanish Fork, which we now know was tremendously successful. Whereas Spanish Fork could directly...

The sale of iProvo to Google Fiber means that Comcast now gets to compete against Google's gig - Time Warner Cable is the incumbent cable company in Kansas City and Austin. Comcast wasted little time and has improved its bundle in Provo long before any new customers are turned on. The Free UTOPIA blog recently reported that Comcast, in response to the incoming competition, is increasing speeds. Jesse writes:

Competition is good, and Comcast is just now proving it. I spoke with one of their sales guys who confirmed that Comcast will be offering a package of 250Mbps/50Mbps for $70 starting in September, but only in Provo. (Sorry, everywhere else.) This is in direct response to Google Fiber coming to town and will include a new modem with a built-in 802.11ac router to take advantage of the speed bump. It’s unknown if this speed tier will land in any other cities in the future.

This is yet another story proving that having a fiber network in your town benefits everyone, not just subscribers.

This is compelling evidence that markets with only choices between DSL and cable are not sufficiently competitive, regardless of what wireless options are available. When threatened with a competitor that it cannot harm with its legions of lobbyists in the state capital or the threat of predatory pricing, Comcast responds with investment and lower prices. Regulators should take note.

Though Provo originally wanted to offer television, telephone, and Internet services directly using its trusted reputation in the community, the state legislature bowed to pressure from Comcast and CenturyLink (then Qwest) to limit local authority and tilt the playing field in favor of two distant corporations (that have still largely failed to invest in the networks needed by Utah communities). Provo was forced to use a wholesale-only business model.

That approach is rarely used today by communities that seek to build out the entire community at once because it is very difficult to generate enough revenue to pay the full costs of the network.

Despite Provo's struggles, Google recognized a community it wanted to work with. From Google's blog post:

Provo started building their own municipal network in 2004 because they decided that providing access to high speed connectivity was important to their community’s future. In 2011, they started looking for a partner that could acquire their network and deliver an affordable service for Provoans. We’re committed to keeping their vision alive, and, if the deal is approved and the acquisition closes, we’d offer our Free Internet service (5 Mbps speeds) to every home along the existing Provo network, for a $30 activation fee and no monthly charge for at least seven years. We would also offer Google Fiber Gigabit Internet—up to 100x faster Internet than today’s average broadband speeds—and the option for Google Fiber TV service with hundreds of your favorite channels. We’d also provide free Gigabit Internet service to 25 local public institutions like schools, hospitals and libraries....

Fresno's loss will be Provo's gain. Why? Because Provo built its own network and can meet the modern telecommunications needs of businesses. A company is moving from Clovis, in Fresno County (California), to Provo, Utah. The Business Journalcovered the story:

Clovis-based Secure Customer Relations, Inc., plans to move its entire operation to Provo, Utah this month, resulting in the loss of 98 jobs.

...

Secure Customer Relations operates a call center that specializes in appointment setting, client prospecting and other functions on behalf of the insurance industry.

Overall, the cost of operations in Provo would be a savings over Clovis, Carter said, including labor costs. He added that Clovis does not have the same level of fiber optic infrastructure as Provo.

Interestingly, Clovis is slated to get better access to broadband as part of the stimulus-funded Central Valley Next-Generation Broadband Infrastructure Project. Unfortunately, that is one of them any middle mile projects that will connect community anchors but not offer any immediate benefits to local businesses and residents. It is a middle mile project, not a last-mile project that would build a fiber-optic access network like Provo has connecting everyone.

This is not to demean the middle-mile project, but such things are often misunderstood (sometimes due to deliberate obfuscations by those promoting them).

"We move a lot of data and need high capacity," CEO Carter Beck told the Journal last week. His company specializes in appointment setting, client prospecting and other functions on behalf of the insurance industry.

The relocation of companies like Secure Customer Relations, Inc. to Utah reaffirms the conclusions of a Utah Broadband Advisory Council Report released last week by the Utah Broadband Project and the Governor's Office of Economic Development (GOED) -- that...

Provo built a city owned FTTH network after its public power utility started connecting its substations with fiber-optic cables in the early 2000's. iProvo ultimately developed along similar open access lines as UTOPIA, but unlike UTOPIA, Provo did not actually want to operate on a purely wholesale model.

iProvo was forced into the wholesale-only model, where the publicly owned network offered wholesale services to independent ISPs that then resold service to residents and businesses. Comcast and Qwest (now CenturyLink) recognized the threat posed by municipalities building next generation networks -- particularly in communities that did not even have full DSL and cable coverage from the giant providers that long delayed upgrades, knowing that subscribers had no other options.

UTOPIA had long had a vision of making the open access, wholesale-only model work (that proceeded to largely fail, for a variety of reasons -- only to start turning around in recent years) but Provo, with its public power utility, was denied its preferred model of offering services directly.

iProvo was built at a cost of $40 million and has operated in the red since, though a number of postive externalities from the network was not included in those calculations. For instance, City Departments had access to much higher capacity connections than were available previously and were not charged for them (a poor practice in our estimation). For more details on iProvo, I recommend a video of a discussion in 2011.

At any rate, iProvo was then sortof sold off to a private provider (sort of because the city is still on the hook for the debt) in large part because private providers are not as crippled by state law. Unfortunately, the network has already developed a bad reputation for many (thanks to the state law preventing Provo from being able to ensure a good subscriber experience).

iProvo was a muni fiber network that was hobbled by the Comcast and Qwest-controlled Utah Legislature. After years of struggling in the face of unique barriers only aimed at publicly owned networks, the local government decided to privatize the network. Unfortunately, the private partner has not succeeded either, leaving Provo with a difficult decision ahead.

Jesse explains some of the history in this short presentation and then takes some excellent questions from the audience. Those of us familiar with different types of broadband technology may skip ahead to the part specifically about iProvo.

Free UTOPIA has published some interesting information about iProvo, a broadband network that was originally publicly owned but crushed under the weight of harassment from Comcast and Qwest via the state legislature. iProvo was built around the same time as UTOPIA and was quite similar but not attached to it.

A few years back, it was privatized … sort of. The debt remained with the City even as they hoped the private service provider would be able to cover the necessary payments. That arrangement has not worked out.

Jesse Harris at Free UTOPIA has done a great job of continuing to cover both UTOPIA and iProvo, doing interviews with key people and digging into details to a great extent. This article explaining iProvo's difficult position is no different, presenting the dilemma from multiple points of view and assessing the options.

Most of you are already aware that Veracity’s reserve fund for iProvo has reached the point of potentially triggering a default. From the news stories you’ve read, odds are good that you think that Broadweave 2.0 is about to come crashing down on the city. I’ve sat down with Veracity and Mayor Curtis to get the real deal story and I don’t think it’s the apocalyptic scenario that sells papers and glues eyeballs to evening newscasts.

Lawrence Kingsley produced a short overview of the UTOPIA (Utah Telecommunication Open Infrastructure Agency) network from late 2008. Though UTOPIA is often cited as a failure, few have taken the time to understand where the network went wrong, why others will not duplicate the problems, and why locals still want to see UTOPIA continue.

Despite its problems, the churn rate from UTOPIA was .5%. This is a tremendous vote of confidence - people who take service from UTOPIA don't unsubscribe. Like so many community networks, the biggest problem UTOPIA faces may be the dirty tricks of incumbents who have used the legislature to attack UTOPIA.

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The question should not be whether to invest in fiber or wireless any more than one would ask whether shoes are “better” than hats. Ultimately, they solve different problems and neither one offers a one size fits all solution.